States Have Cut Money For Higher Education 17 Percent Since The Recession, Report Finds

In spite of a gradual economic recovery and improving revenues, most states are spending dramatically less on public higher education, a new report says.

States are collectively investing 17 percent less in their public colleges and universities, or $1,525 less per student, since 2007, according to the left-leaning Center on Budget and Policy Priorities, which used inflation-adjusted figures.

While many states have begun slowly returning to pre-recession spending levels, that’s little salve to the millions of families who must contend with published tuition prices at public colleges that are 33 percent higher today than they were in 2007.

“These sharp tuition increases have accelerated longer-term trends of college becoming less affordable and costs shifting from states to students,” the report’s authors wrote. “Over the last 20 years, the price of attending a four-year public college or university has grown significantly faster than the median income. Although federal student aid and tax credits have risen, on average they have fallen short of covering the tuition increases.”

The report, issued Thursday, examines the published tuition fees, or “sticker prices.” Although the average sticker price for community colleges and four-year public institutions has grown by a third since the recession, the net price – or how much students actually pay after factoring in grants and other aid – is lower. According to the College Board, at four-year public schools, the average published tuition price was $9,400 in 2015-16, but the net price was around $4,000.

Of course, other expenses such as housing, food and transportation collectively can dwarf the costs of tuition, and can account for most or all of a lower- or middle-class family’s income. Under such circumstances, saving for college becomes difficult and many students are forced to borrow.

Michael Mitchell, one of the report’s three authors, said in a call with reporters that between 2008 and 2014, the share of students graduating with debt from a public four-year college had risen from 55 to 60 percent, while the size of the average debt load had risen 18 percent. In contrast, he said, in the six years leading up to the recession, average debt had gone up a total of 1 percent.

Only four states spent more per student in 2015-16 than in 2007-08: Montana, North Dakota, Wisconsin, and Wyoming.

Eight states cut per-student spending by 30 percent in that time period, and Arizona by more than 50 percent.

Some states with large populations have nearly returned to the per-student spending levels of 2007-08. California is behind by 3 percent, and New York by 6 percent.

Texas, the second most populous state after California, is lagging its 2007-08 expenditures by 17 percent. Florida’s spending is down 22 percent.

States are feeling the fiscal pinch from several directions, even as they’ve begun to bring in more money today compared to 2008. Corrections facilities and Medicaid coverage have increasingly competed for limited dollars from state coffers. And student enrollment continues to grow, forcing states to spend more each year just to keep per-student expenditures even. The center’s report notes that between 2007-08 and 2013-14, the most recent year for which the figures are available, enrollment at the nation’s public institutions of higher education has risen 8.6 percent, the equivalent of 900,000 full-time students.

“The story that people don’t often talk about is the enrollment side of the changes,” said Andrew Kelly, who heads the center on higher education reform at the center-right American Enterprise Institute. “A lot of states did actually lower how much they appropriated from one year to the next, which, coupled with increases in enrollment, really drove those per-pupil spending numbers down.”

The report also notes that public colleges and universities increasingly rely on tuition for revenue. In 1988, educational revenue from state funds was more than three times the amount colleges collected from tuition and fees, but by 2015 that ratio had narrowed so much that state financing and tuition revenue were almost even (many universities bring in revenue through hospitals and other non-educational endeavors, as well).

“The trend for state spending is not really up for debate,” Kelly said. “I think the question is what are the implications of those trends.”

*Update, May 26, 2016: Since the CBPP report was published, its authors have revised it to add information they had not originally included on how much revenue Wisconsin’s public colleges and universities receive from the state. While in 2015 Wisconsin lawmakers cut $250 million from the University of Wisconsin system, the state also took on some of the expenses that localities had spent on public technical colleges in the 2013-2015 budget. That swap in funding, more than $400 million annually, technically counted as an increase in state support for higher education, even though the change didn’t result in any additional total revenue for Wisconsin public colleges and universities.